What Price Fashion?: Vogue Magazine September 2009

With today’s shoppers looking for real value when they drop their dollars, designers are trying to keep quality high and costs low. Teri Agins reports.

Now that the fall styles are in, starring the season’s sequined minidresses, streamlined peacoats, and those towering gladiators, scores of anxious shoppers scrutinizing the shiny new merchandise are wondering aloud, Is this really worth $800?

In the weeks following the great economic meltdown of 2008, there was a bonanza of unexpected bargains ripe for the picking: Racks of $1,000 designer frocks were consigned to liquidation for as much as 70 percent off well before Thanksgiving. Stuck with an excess of seasonal stock, shell-shocked retailers had no other choice, erasing most of their profits along the way. Bloodied but unbowed, fashion houses large and small pressed the reset button this year. For months, the trend that buyers have been buzzing about is value. The new proposition put everybody on guard and drove prices down by as much as 20 percent at labels like Dolce & Gabbana and Moschino. Designers also dreamed up sharply priced novelties to balance out their collections. For example, Jil Sander’s Raf Simons turned out exquisite $1,300 dresses; at Givenchy, Riccardo Tisci added distinctive cotton blouses for as little as $440. Value now depends on conferring the truest bang for the buck.

Still, standouts like Lanvin’s $2,800 black sleeveless belted sheath remain on the market alongside sublime $175 wool-silk-jersey tanks trimmed in python-embossed pigskin from 3.1 Phillip Lim. More than in the past, luxury is about something that is special, that has a real authenticity. It isn’t so mass produced, says Julie Gilhart, fashion director at Barneys New York. It can also be found in a beautiful handwoven scarf from Bolivia that sells for under $300,she says. We’re moving into an era of transparency, when designers are being held more responsible for what they do.

Long before the recession hit, prices of high fashion had spiraled out of control, fueled in recent years by the rising cost of imported fabrics and labor from Europe. But even when the good times rolled, overpriced fashion no longer made any sense. Amid a declining demand for clothes and accessories, the biggest challenge for fashion houses is to better justify why things cost what they do. The luxury industry, in particular, needs to arm the consumer with the rational argument, as well as the emotional argument, why they need to buy that Louis Vuitton bag,observes Martin Lindstrom, marketing expert and author of Buyology: Truth and Lies About Why We Buy. When it comes to fashion nowadays, he insists, there has to be that practical dimension.

Perhaps no designer lives by the rule of practicality more than Phillip Lim. The 36-year-old designer’s mantra: original design, packed with fine detailshand-stitching, bound buttonholes, gazar inner facingsat sensible prices. (A head-turning feather-and-sequin cocktail dress retails for $950.) He and business partner Wen Zhou never set their sights on couture but on beautiful, affordable clothes. Their Manhattan garment-district workroom is a model of discipline and restraint. They know the techniques and shortcuts that can give a piece the right wow factor while keeping retail prices reasonable.

The big secret here is that there is no waste,Lim says. He hasn’t fallen for the folly of fashion because he knows that overproduction and overexperimentation with samples burns up all your margins. He designs all women’s, men’s, and children’s collections with only three assistants and no stylists; the fewer cooks in the kitchen, the more he keeps from being second-guessed.

We produce only enough to cover the retail orders we get, he says. On the front end, Lim painstakingly maps out the collections a mix of half new and half repeat styles. Of the 240 pieces he created for fall 2009, he wound up manufacturing them all a perfect batting average which is pretty much the way he does it every season, says Zhou.

Amid declining demand, the biggest challenge for fashion houses is to better justify why things cost what they do

How can Lim estimate with such precision? I am merchandising and designing the line at the same time, he explains.

Lim appears to be from the same school as Lindstrom, who maintains that not only are the strongest consumer products fashionable, their many functions justify their worth. Case in point: a beautifully tailored $650 shadow-striped black wool blazer, which is actually two garments in one. Zip on its sequined lapels and it turns into a cocktail tuxedo jacket. Delightful extras like an inside breast pocket and underarm fabric dress shields are features you don’t often find even on $2,000 jackets. It comes as no surprise that retail buyers haven’t been pressuring Lim to lower his prices. Instead, he says, stores have been coming in and saying, I can’t believe that your prices aren’t higher. So they are ordering more.

Proenza Schouler opened its fall runway show with a color-block topper with billowy sleeves, a fantastic piece that was only $1,200, ordinarily an opening price point for our coats, says Shirley Cook, chief executive officer. We were superconscious about adding pieces that were versatile, that people could wear during the day.Already moving briskly since it arrived in stores in July: the very best skinny stretch-twill pant you’ve ever seenand it’s $550.

At the highest levels of the fashion pyramid, the world of small-scale production (by the dozens, not the thousands) and limited distribution, designers have no choice but to keep prices high, which is the only way these brands can deliver the best fabrics and the highest quality of craftsmanship. There will always be an affluent and discerning set unfazed by high prices, who prize top-tier exclusivity from the likes of Isabel Toledo, Azzedine Alaa, and Lanvin. But even those designers are conscious of today’s value mind-set.

Alber Elbaz has always had an enthusiastic audience for his day dresses, which can reach $4,000. But even he agrees that Lanvin has to lower our prices. Earlier this year he sprang into action, personally calling suppliers and factories seeking to shave costs. He also markets the 22 Faubourg label, which includes several pieces under $1,000.

Julie Macklowe, a hedge-fund-portfolio manager, attests that she has bought less this year and is putting more thought into what I buy. Yet she didn’t balk at splurging on the red Oscar de la Renta evening dress she wore to the Met’s Costume Institute Gala. It was a must-have, the only one in my size, that I will have forever, she says. It was not an impulse purchase.With loyal clients like Macklowe, the house of Oscar de la Renta is sanguine about its approach to the current retail climate. We still have the $10,000 and $12,000 evening gowns, all the things that we’ve always done, says Alex Bolen, chief executive. But the designer has expanded his resort collection to include lower-priced pieces that arrive in stores in December.

We have sharpened our pencil when it comes to the cost of fabric and labor for details like embroidery, to come up with the best value, Bolen says. We have opening price points that are well under $2,000, when the competition is in the high $2,000s or around $3,000. We are using the same silk fabrics and detailing, but we are also expanding more into cottons and silk blends. This is the moment when we are putting as much on the hanger as we can.